(CN) – A company that contracted with the United States to test telecommunications for the U.S. troops must face claims that it overstated its financial solvency to the government, a federal judge ruled.
The government sued Readix and its owners, claiming they induced federal agencies to award them contracts through false representations about their financial solvency and their ability to fulfill the contracts.
Readix, a Florida corporation established in 2003, provides software development, mechanical design and telecommunications technologies to private corporations, universities and the government.
Readix asked a Miami federal judge to dismiss the action, arguing that the the whistle-blower’s claims are already a matter of public record.
Under the public disclosure bar, courts must dismiss false-claims actions that allege information previously disclosed through certain public channels, such as federal reports or investigations.
Readix argued that the whistle-blower’s allegations were publicly disclosed in correspondence between a private citizen and a government employee.
But U.S. District Judge Paul Huck found that the citizen’s response to the government employee’s letter could not be considered a federal report.
And while the government’s letter is a public disclosure channel, it did not contain the financial solvency claim, nor did it suggest that Readix and its owners engaged in wrongdoing.
Huck found that the suit does have jurisdiction, but agreed that it fails to state a claim and to plead fraud with sufficient particularity.
The whistle-blower can file an amended complaint by July 9.